Preemptive rights can prevent cheap-issuance tunneling by a controller when outside investors know that the offered securities are cheap. But when outsiders cannot tell whether the securities are cheap or overpriced, preemptive rights fail to prevent such tunneling. Afraid of purchasing overpriced securities, outsiders may rationally refrain from purchasing (even when the securities are in fact cheap), and then suffer cheap-issuance losses. I put forward a mechanism to make preemptive rights more effective: requiring disclosure of a controller’s subscription commitment, before outside investors must finalize their own, so that outsiders can choose to mimic it.

This chapter treats the form of authoritarian constitutionalism prevalent in Europe and the Western Hemisphere as an ideology, in the weak sense, an amalgam of tropes and rhetorics that allude to or evoke in an incoherent way two authoritarian traditions: a reactionary Catholic one and a fascist one. The ideology is one of the factors guiding legal interventions in liberal democratic constitutional orders that are also internally incoherent. Incoherence, along with the existence of conservative and progressive factions within the liberal democratic camp, creates multiple occasions for a hermeneutic of suspicion with respect to contemporary constitutional argument. In this situation, decision among legal alternatives requires a politics. As an example, even “court packing,” which is usually treated as a priori authoritarian, may in some circumstances be legally and politically justified in a liberal democratic framework. This approach contrasts with one that treats authoritarianism either as a coherent ideology or as signifying merely violation of liberal democratic norms.

Chevron v NRDC may well be the most important case in all of administrative law. It establishes a general principle, which is that agencies may interpret ambiguous statutory provisions, so long as their interpretations are reasonable. That principle is now under serious pressure. If the Court abandoned it, how would Chevron itself be decided? There are five possible approaches: (1) textualism; (2) purposivism; (3) resort to canons of construction; (4) use of Skidmore deference; and (5) validation of the agency’s decision, on the ground that no statutory provision prohibited it. In the context of Chevron, (1) and (2) run into serious problems, but (3), (4), and (5) are promising. The discussion suggests some general lessons for statutory interpretation and administrative law, and offers some cautionary notes for those who want to abandon the Chevron framework. Abandoning that framework would introduce high levels of confusion in the lower courts and the Supreme Court itself, and in all probability, the framework that would ultimately replace it would turn out to look a fair bit like that in Chevron itself.

The threshold question for all originalist methodologies concerns the original communicative content of the words of the Constitution. For too long this inquiry has been pursued through tools that are ill-suited to the task. Dictionaries generally just define individual words; they don’t typically define phrases or allow for the consideration of broader linguistic context. And while dictionaries can provide a list of possible senses, they can’t tell us which sense is the most ordinary (or common). Founding-era dictionaries, moreover, were generally the work of one individual, tended to plagiarize each other, and relied on famous, often dated examples of English usage (from Shakespeare or the King James Bible).
Originalists have also turned to examples of usage in founding-era documents. This approach can address some of the shortcomings of dictionaries; a careful inquiry into sample sentences from founding-era literature can consider a wide range of semantic context. Yet even here the standard inquiry falls short. Originalists tend to turn only to certain sources, such as the Federalist Papers or the records of the state constitutional conventions, and those sources may not fully reflect how ordinary users of English of the day would have understood the Constitution (or at least have used language). Second, the number of founding-era documents relied on is often rather small, especially for generalizing about an entire country (or profession, in the case of lawyers). This opens originalists up to criticisms of cherry-picking, and even if that is not the case, sample sizes are just too small to confidently answer originalist questions.
But all is not lost. Big data, and the tools of linguists, have the potential to bring greater rigor and transparency to the practice of originalism. This article will explore the application of corpus linguistic methodology to aid originalism’s inquiry into the original communicative content of the Constitution. We propose to improve this inquiry by use of a newly released corpus (or database) of founding-era texts: the beta version of the Corpus of Founding-Era American English. The initial beta version will contain approximately 150 million words, derived from the Evans Early American Imprint Series (books, pamphlets and broadsides by all types of Americans on all types of subjects), the National Archives Founders Online Project (the papers of Washington, Franklin, Adams, Jefferson, Madison, and Hamilton, including correspondence to them), and Hein Online’s Legal Database (cases, statutes, legislative debates, etc.).
The paper will showcase how typical tools of a corpus—concordance lines, collocation, clusters (or n-grams), and frequency data—can aid in the search for original communicative content. We will also show how corpus data can help determine whether a word or phrase in question is best thought of as an ordinary one or a legal term of art. To showcase corpus linguistic methodology, the paper will analyze important clauses in the Constitution that have generated litigation and controversy over the years (commerce, public use, and natural born) and another whose original meaning has been presumed to be clear (domestic violence). We propose best practices, and also discuss the limitations of corpus linguistic methodology for originalism.
Larry Solum has predicted that “corpus linguistics will revolutionize statutory and constitutional interpretation.”* Our paper seeks to chart out the first steps of that revolution so that others may follow.

In their recent book "To End a Presidency" Prof. Laurence Tribe and Joshua Matz canvas the arguments for and against impeaching a president who has committed high Crimes and Misdemeanors. This review essay examines that same question ("why impeach?") through the broader lens of criminal jurisprudence, which perennially confronts the related and familiar question: "why punish?" After assessing Tribe and Matz's arguments for and against impeachment along the familiar Benthamite and Kantian axes, the essay ultimately recasts the dilemma of impeachment as a dilemma for reconstructivist accounts of punishment itself: Does punishing a wrongdoer--including potentially the President of the United States--help society heal in the wake of serious criminal acts, or does the prospect of punishment only tear us further apart?

Nicole Summers, Setting the Standard for Proximate Cause in the Wake of Bank of America Corp. v. City of Miami, 97 N.C. L. Rev. (forthcoming 2019).

Categories:

Discrimination & Civil Rights

,

Government & Politics

Sub-Categories:

Discrimination

,

Housing Law

,

Judges & Jurisprudence

,

Supreme Court of the United States

,

Statutory Interpretation

Links:

Type: Article

Abstract

The Supreme Court’s recent opinion in Bank of America Corp. v. City of Miami has created fresh uncertainty around the interpretation of the Fair Housing Act. The Supreme Court held for the first time that there is a proximate cause requirement under the Fair Housing Act, but expressly declined to decide the standard for meeting that requirement. This Article responds to that open question. It contextualizes Bank of America Corp. within the Court’s growing body of statutory proximate cause doctrine, and takes the case as a jumping off point to address the broader question of how to determine the meaning of proximate cause in all statutory claims. The Article argues that the Supreme Court and lower courts must adopt a uniform analytical framework for the determination of proximate cause in statutory claims. The Article demonstrates that the Supreme Court’s failure to do so thus far has produced deep doctrinal incoherence, culminating in the Court’s inability to articulate a standard for proximate cause under the Fair Housing Act in Bank of America Corp. The Article proposes that courts uniformly apply the “scope of liability” framework as set forth in the recent Restatement (Third) of Torts. It contends that the scope of liability framework properly anchors proximate cause in the statutory scheme, ensures doctrinal determinacy, and prevents improper judicial legislation. The Article then applies this framework to arrive at the proper standard for proximate cause under the Fair Housing Act. Through extensive legislative history analysis, the Article concludes that the standard for proximate cause under the Fair Housing Act is satisfied where the harm caused by unlawful discrimination results from direct effects on the housing market and falls within one of the three core areas of congressional concern underlying the Act’s enactment.

Nikolas Bowie, The Government Could Not Work Doctrine, 105 Va. L. Rev. 1 (forthcoming 2019).

Categories:

Constitutional Law

Sub-Categories:

First Amendment

Links:

Type: Article

Abstract

For over two thousand years, conscientious people from Plato to Gandhi have grappled with the dilemma of how to respond when a government orders you to do something you disagree with — say, pay a tax that will fund a war. Perhaps the most famous answer comes from the book of Matthew, when Jesus of Nazareth declared, "Render . . . unto Caesar the things that are Caesar's, and unto God the things that are God's." One way to interpret this declaration contends that you should always comply with fairly imposed civil obligations — at least until you can persuade others to accommodate your views. A second argues that if conscience so dictates, you should disobey the government and accept whatever punishment it doles in return.
Recently, a group of constitutional lawyers have offered a third option: Sue the government. Adopting a libertarian interpretation of the First Amendment's protection of free speech and religious exercise, these lawyers argue that it is presumptively unconstitutional for the government ever to put one's moral obligations in conflict with one's civil obligations. As evidence, they draw on cases such as West Virginia v. Barnette, in which the Supreme Court struck down a regulation that compelled objecting school children to recite the pledge of allegiance. In the past few years these lawyers have asked the Court to extend Barnette's logic to petitioners who object to birth control, labor unions, vaccinations, same-sex marriage, and all kinds of politically charged topics.
The Supreme Court has been sympathetic to these lawyers, in one case declaring that the First Amendment generally "prevent[s] the government from compelling individuals to express certain views or pay subsidies for speech to which they object." The Court has even acted on this declaration to invalidate laws that tax public-sector employees and donate the revenue to politically active labor unions. But this declaration is wrong. Treating compulsory laws as presumptively invalid not only contradicts historical practice, it's also at odds with the Court's precedent in nearly every other constitutional context.
The First Amendment, along with the rest of the Constitution, was adopted to create a functional government out of the embers of a failing state. For any government to function — especially in a politically and religiously pluralistic society like the United States — it must be able to compel residents to do all sorts of things a minority might disagree with, from paying taxes and obeying generally applicable laws to accepting conditions on public benefits. Accordingly, the Supreme Court has rejected claims brought under every clause of the First Amendment (and many other articles of the Constitution) whenever it has realized that "government would not work" were it constitutionally prohibited from compelling citizens to do or pay for things they might not like. Even the author of Barnette recognized the danger of converting the First Amendment into a suicide pact.
This Article molds these Supreme Court moments of clarity into a coherent doctrine, which I call the "government could not work" doctrine. Analyzing a wide variety of cases, I conclude that objectionable compulsion, in and of itself, should not make a law presumptively unconstitutional, triggering the so-called strict scrutiny that the Court currently applies when a person objects to subsidizing the political activity of a labor union. As the Court has declared throughout its history — with a brief exception between about 1940 and 1980 — applying such strict scrutiny every time a person challenges a compulsory law would "cripple" the government.
In other words, the First Amendment doesn't render American citizens uniquely exempt from the universal dilemma of having to decide whether to abide by a disagreeable law. The authors of the First Amendment wanted a government that tolerated dissent, not a government that would be incapacitated by it.

In recent years, there has been a great deal of discussion of the welfare effects of digital goods, including social media. A national survey, designed to monetize the benefits of a variety of social media platforms (including Facebook, Twitter, YouTube, and Instagram), found a massive disparity between willingness to pay (WTP) and willingness to accept (WTA). The sheer magnitude of this disparity reflects a “superendowment effect.” Social media may be Wasting Time Goods (WTG) – goods on which people spend time, but for which they are not, on reflection, willing to pay much (if anything). It is also possible that in the context of the WTP question, people may be giving protest answers, signaling their intense opposition to being asked to pay for something that they had formerly enjoyed for free. Their answers may be expressive, rather than reflective of actual welfare effects. At the same time, the WTA measure may also be expressive, a different form of protest, telling us little about the actual effects of social media on people’s lives and experiences. It may greatly overstate those effects. In this context, there may well be a sharp disparity between conventional economic measures and actual effects on experienced well-being.

A funny thing about the U.S. Constitution is that it’s written down. Words might seem like an obvious feature of a constitution, but they're notably missing from much of the constitution of the United Kingdom, the country from which the United States seceded. Historians have often assumed that the quirky American practice of putting constitutions into single documents has its origins in the corporate charters of the seventeenth-century trading companies that founded more than half of the thirteen original states. But, as historian Mary Bilder has written, it is surprisingly difficult to explain the change from corporate charter to modern constitution with precision and persuasive power.
This Article attempts to do just that, telling the story of an eighty-year lawsuit that forced the Massachusetts Bay Company to treat its charter's terms as Gospel. Relying on original research of thousands of primary sources from the United States and United Kingdom spanning from 1607 through 1793, the Article presents an account of how a corporate charter evolved into a “Charter Constitution” in America while the British Constitution remained intangible.
The Article demonstrates that written words became a defining feature of American constitutionalism a century before the American Revolution, and that this distinction between the American and British understanding of constitutions contributed to American independence. It also demonstrates that charter constitutionalism emphasized text but also included methods of interpretation that today might be described as purposivist or living constitutionalist.

Robert Mnookin, The Jewish American Paradox: Embracing Choice in a Changing World (PublicAffairs 2018).

Categories:

Disciplinary Perspectives & Law

Sub-Categories:

Jewish Law

Type: Book

Abstract

Jews in America are in a period of unprecedented status and impact, but for many their identity as Jews--religiously, historically, culturally--is increasingly complicated. Many are becoming Jews without Judaism. It appears success and acceptance will accomplish what even the most virulent anti-Semitism never could---if not the disappearance of Jews themselves, the undermining of what it means to be Jewish.
In this thoughtful, personal, deeply-reasoned book, Robert Mnookin explores the conundrums of Jewish identity, faith and community in America by delving deep into Jewish history, law, and custom. He talks to rabbis, scholars, and other Jews of many perspectives to explore the head, heart, and heritage of Judaism and confronts key challenges in the Jewish debate from the issue of intermarriage to the matter of Israeli policies.
Mnookin shares provocative stories of the ways American Jews have forged (or disavowed) their Jewish identity over the past half-century, including his own to answer the standing question: How can Jews who have different values, perspectives, and relationships with their faith, keep the community open, vibrant, and thriving?

Why do revolutions happen? Why are they so difficult to anticipate? Some of the most instructive answers point to three factors: (1) preference falsification on the part of rebels or revolutionaries; (2) diverse thresholds for revolutionary activity; and (3) social interactions that do or do not trigger the relevant thresholds. Under conditions of actual or perceived injustice or oppression, true preferences and thresholds are probably impossible to observe; social interactions are impossible to anticipate. Even if we could observe (1) and (2), the challenge of anticipating (3) would make it essentially impossible to foresee revolutions. For all their differences, and with appropriate qualifications, the French Revolution, the Russian Revolution, the fall of Communism, and the Arab Spring were unanticipated largely for these reasons. And in light of (1), (2), and (3), it is hazardous to think that the success of successful revolutions is essentially inevitable. (The same is true for the failure of unsuccessful revolutions.) History is only run once, so we will never know, but small or serendipitous factors might have initiated (or stopped) a revolutionary cascade. The #MeToo movement can be seen as such a cascade, marked by (1), (2), and (3). For that movement, as for successful revolutions, we might be able to point to some factors as necessary conditions, but hindsight is hazardous. It is also important to note that in revolutions, as in #MeToo, preferences and beliefs are not merely revealed; they are also transformed. Revolutionary activity, large or small, puts issues about preference falsification, experience falsification, and adaptive preferences in a new light.

Charles Fried, Defining and Constraining the Sovereign: “The Most Difficult of All Tasks,”inSovereignty and the New Executive Authority 67 (Claire Finkelstein & Michael Skerker eds., 2018).

There is not a single American awake to the world who is comfortable with the way things are.”
So begins Lawrence Lessig's sweeping indictment of contemporary American institutions and the corruption that besets them. We can all see it—from the selling of Congress to special interests to the corporate capture of the academy. Something is wrong. It’s getting worse.
And it’s our fault. What Lessig shows, brilliantly and persuasively, is that we can’t blame the problems of contemporary American life on bad people, as our discourse all too often tends to do. Rather, he explains, “We have allowed core institutions of America’s economic, social, and political life to become corrupted. Not by evil souls, but by good souls. Not through crime, but through compromise.” Every one of us, every day, making the modest compromises that seem necessary to keep moving along, is contributing to the rot at the core of American civic life. Through case studies of Congress, finance, the academy, the media, and the law, Lessig shows how institutions are drawn away from higher purposes and toward money, power, quick rewards—the first steps to corruption.
Lessig knows that a charge so broad should not be levied lightly, and that our instinct will be to resist it. So he brings copious, damning detail gleaned from years of research, building a case that is all but incontrovertible: America is on the wrong path. If we don’t acknowledge our own part in that, and act now to change it, we will hand our children a less perfect union than we were given. It will be a long struggle. This book represents the first steps.

Mary Ann Glendon, Reflections on the Comparative Study of Law in the 21st Century, inThe Past, Present and Future of Comparative Law (K. Boele-Woelki ed., Springer forthcoming 2018).

Categories:

International, Foreign & Comparative Law

Sub-Categories:

Comparative Law

Type: Book

Abstract

This book is published by the International Academy of Comparative Law to honor five great comparatists: Jean-Louis Baudouin from Canada, Xavier Blanc-Jouvan from France, Mary Ann Glendon from the United States of America, Hein Kötz from ...

A key aim of patient-centered outcomes research (PCOR) is to generate data that are important to patients by deliberately and extensively involving them in all aspects of research, from design to dissemination. However, certain elements of PCOR raise challenging and potentially novel ethical and regulatory issues for institutional review boards and oversight bodies. These challenges stem primarily from the engagement of patients in roles other than research subject, such as advisors, study personnel, and co-investigators, which gives rise to questions about appropriate levels of protection, training, and education, as well as identifying and managing conflicts of interest. This article presents and discusses recommendations from a Delphi expert panel that was convened to address these and other PCOR-related oversight challenges.

The dominant formulation for modeling the objective function of managers of competing firm with horizontal shareholding has been critiqued for producing the result that, if non-horizontal shareholders are highly dispersed, managers would mimic the interests of horizontal shareholders even if they own a share of the firm that does not induce full control. We show that this issue can be avoided (while maintaining the remaining features of the dominant approach) with an alternative formulation that is derived from a probabilistic voting model that assumes shareholders with higher financial stakes will take greater interest in the managerial actions, which yields the result that managers maximize a control-weighted sum of the shareholders’ relative returns.

Annette Gordon-Reed, Might vs. Right: The Development of the Eurocentric ‘Law of Nations’, Times Literary Supplement, Sept. 28, 2018, at 12 (reviewing Jennifer Pitts, Boundaries of the International: Law and Empire (2018)).

Artificial intelligence (“AI”) is changing the world before our eyes. The promise of AI to improve our lives is enormous. AI-based systems are already outperforming medical specialists in diagnosing certain diseases, while the use of AI in the financial system is expanding access to credit to borrowers that were once passed by. Yet AI also has downsides that dampen its considerable promise. AI-based systems impact the right to privacy since they depend on the collection and use of vast quantities of data to make predictions which, in numerous cases, have served to perpetuate existing social patterns of bias and discrimination.
These disturbing possibilities have given rise to a movement seeking to embed ethical considerations into the development and deployment of AI. This project, on the other hand, demonstrates the considerable value in using human rights law to evaluate and address the complex impacts of AI on society. Human rights law provides an agreed set of norms and a shared language and institutional infrastructure for helping to ensure that the promises of AI are met and its greatest perils are avoided.
Our project seeks to advance the emerging conversation on AI and human rights by evaluating the human rights impacts of six current uses of AI. Our framework recognizes that AI systems are not being deployed against a blank slate, but rather against the backdrop of social conditions that have complex pre-existing human rights impacts of their own.
By digging deep into current AI implementations, we see how they impact the full range of human rights guaranteed by international law, privacy chief among them. We also gain insight into the unequal distribution of the positive and negative impacts of AI on human rights throughout society, and begin to explore the power of the human rights framework to address these disparate impacts.

John C. Coates, IV, The Future of Corporate Governance Part I: The Problem of Twelve (Sept. 20, 2018).

Categories:

Corporate Law & Securities

Sub-Categories:

Corporate Governance

Links:

Type: Other

Abstract

Three ongoing mega-trends are reshaping corporate governance: indexing, private equity, and globalization. These trends threaten to permanently entangle business with the state and create organizations controlled by a small number of individuals with unsurpassed power. The essay focuses on indexation. After providing background, the essay describes the rise of and reasons for indexation, noting that “passive” indexed investing takes a variety of forms. Data on indexation are presented — with the bottom line that indexation has progressed farther than most realize, because foreign ownership, institutional indexation, and “closet” indexation are often neglected by observers. Index providers’ incentives, resources, and methods are reviewed, with an emphasis on the how such providers have greater practical importance than simpler analytical approaches might suggest. The essay ends with an outline of policy options, and preliminary analyses of which seem likely to address the “Problem of Twelve” — the likelihood that in the near future roughly twelve individuals will have practical power over the majority of U.S. public companies.

This paper reports the results of an experiment designed to assess the ability of an enforcement agency to detect and deter harmful short-term activities committed by groups of injurers. With ordered-leniency policies, early cooperators receive reduced sanctions. We replicate the strategic environment described by Landeo and Spier (2018). In theory, the optimal ordered-leniency policy depends on the refinement criterion applied in case of multiplicity of equilibria. Our findings are as follows. First, we provide empirical evidence of a "race-to-the-courthouse" effect of ordered leniency: Mild and Strong Leniency induce the injurers to self-report promptly. These findings suggest that the injurers' behaviors are aligned with the risk-dominance refinement. Second, Mild and Strong Leniency significantly increase the likelihood of detection of harmful activities. This fundamental finding is explained by the high self-reporting rates under ordered-leniency policies. Third, as a result of the increase in the detection rates, the averages fines are significantly higher under Mild and Strong Leniency. As expected when the risk-dominance refinement is applied, Mild Leniency exhibits the highest average fine.

Max M. Schanzenbach & Robert H. Sitkoff, The Law and Economics of Environmental, Social, and Governance Investing by a Fiduciary (September 5, 2018).

Categories:

Banking & Finance

,

Corporate Law & Securities

Sub-Categories:

Finance

,

Fiduciary Law

,

Investment Products

,

Fiduciaries

,

Shareholders

Links:

Type: Other

Abstract

The use of environmental, social, and governance (ESG) factors in investing is increasingly common and widely encouraged by investment professionals and non-government organizations. However, trustees and other fiduciary investors in the United States, who manage trillions of dollars, have raised concerns that using ESG factors violates the fiduciary duty of loyalty. Under the “sole interest rule” of trust fiduciary law, a trustee or other investment fiduciary must consider only the interests of the beneficiary. Accordingly, a fiduciary’s use of ESG factors, if motivated by the fiduciary’s own sense of ethics or to obtain collateral benefits for third parties, violates the duty of loyalty. On the other hand, some academics and investment professionals have argued that ESG investing can provide superior risk-adjusted returns. On this basis, some have even argued that ESG investing is required by the fiduciary duty of care. Against this backdrop of uncertainty, this paper examines the law and economics of ESG investing by a fiduciary. We differentiate “collateral benefits” ESG from “risk-return” ESG, and we provide a balanced assessment of the theory and evidence from financial economics about the possibility of persistent, enhanced returns from risk-return ESG.
We show that ESG investing is permissible under trust fiduciary law only if two conditions are satisfied: (1) the fiduciary believes in good faith that ESG investing will benefit the beneficiary directly by improving risk-adjusted return, and (2) the fiduciary’s exclusive motive for ESG investing is to obtain this direct benefit. We reject the claim that the law imposes any specific investment strategy on fiduciary investors, ESG or otherwise. We also consider how the law should assess ESG investing by a fiduciary if authorized by the terms of a trust or a beneficiary or if it would be consistent with a charity’s purpose, clarifying such cases by asking whether a distribution would have been permissible under similar circumstances.

William Eskridge and Lauren Baer’s (96 GEO. L. J. 1083 (2008)) “empirical study of all 1014 Supreme Court cases between Chevron and Hamdan in which an agency interpretation of a statute was at issue” finds that “the Court does not apply the Chevron framework in nearly three-quarters of the cases where it would appear applicable.” Our reexamination of this study finds that the fraction of such cases is far lower, and indeed closer to zero. Our main methodological innovation is to infer Chevron applicability from Supreme Court litigants’ briefs rather than our own evaluation of the cases’ facts, as in Eskridge and Baer’s study. In over half the cases flagged by Eskridge and Baer, neither of the parties (nor, where applicable, the Solicitor General as amicus) cited Chevron, and in almost half of the cases within that subset, no one argued for or against deference of any kind. In most of a sample of the remaining cases, the Supreme Court either did not need to reach the Chevron issue, or actually applied it, at least in an abbreviated form.

Human Rights, Democracy, and Legitimacy in a World of Disorder brings together respected scholars from diverse disciplines to examine a trio of key concepts that help to stabilize states and the international order. While used pervasively by philosophers, legal scholars, and politicians, the precise content of these concepts is disputed, and they face new challenges in the conditions of disorder brought by the twenty-first century. This volume will explore the interrelationships and possible tensions between human rights, democracy, and legitimacy, from the philosophical, legal, and political perspectives; as well as the role of these concepts in addressing particular problems such as economic inequality, catastrophic risks posed by new technologies, access to health care, regional governance, and responses to mass migration. Made up of essays arising from an interdisciplinary symposium convened at Harvard Law School in 2016, this volume will examine how these trusted concepts may bring order to the global community.

How do judgments about law and morality shift? Why do we come to see conduct as egregiously wrong, when we had formerly seen it as merely inappropriate or even unobjectionable? Why do shifts occur in the opposite direction? A clue comes from the fact that some of our judgments are unstable, in the sense that they are an artifact of, or endogenous to, what else we see. This is true of sensory perception: Whether an object counts as blue or purple depends on what other objects surround it. It is also true for ethical judgments: Whether conduct counts as unethical depends on what other conduct is on people’s viewscreens. It follows that conduct that was formerly seen as ethical may come to seem unethical, as terrible behavior becomes less common, and also that conduct that was formerly seen as unethical may come to seem ethical, as terrible behavior becomes more common. In these circumstances, law (and enforcement practices) can have an important signaling effect, giving people a sense of what is normal and what is not. There is an important supplemental point, intensifying these effects: Once conduct comes to be seen as part of an unacceptable category – abusiveness, racism, lack of patriotism, microaggression, sexual harassment – real or apparent exemplars that are not so egregious, or perhaps not objectionable at all, might be taken as egregious, because they take on the stigma now associated with the category. Stigmatization by categorization can intensify the process by which formerly unobjectionable behavior becomes regarded as abhorrent. There is a relationship between stigmatization by categorization and “concept creep,” an idea applied in psychology to shifting understandings of such concepts as abuse, bullying, mental illness, and prejudice.

Opinions on government policies vary widely. Some people feel passionately about the child obesity epidemic and support government regulation of sugary drinks. Others argue that people should be able to eat and drink whatever they like. Some people are alarmed about climate change and favor aggressive government intervention. Others don't feel the need for any sort of climate regulation. In The Cost-Benefit Revolution, Cass Sunstein argues our major disagreements really involve facts, not values. It follows that government policy should not be based on public opinion, intuitions, or pressure from interest groups, but on numbers―meaning careful consideration of costs and benefits. Will a policy save one life, or one thousand lives? Will it impose costs on consumers, and if so, will the costs be high or negligible? Will it hurt workers and small businesses, and, if so, precisely how much?
As the Obama administration's "regulatory czar," Sunstein knows his subject in both theory and practice. Drawing on behavioral economics and his well-known emphasis on "nudging," he celebrates the cost-benefit revolution in policy making, tracing its defining moments in the Reagan, Clinton, and Obama administrations (and pondering its uncertain future in the Trump administration). He acknowledges that public officials often lack information about costs and benefits, and outlines state-of-the-art techniques for acquiring that information. Policies should make people's lives better. Quantitative cost-benefit analysis, Sunstein argues, is the best available method for making this happen―even if, in the future, new measures of human well-being, also explored in this book, may be better still.

We are living in an age of political turbulence, social division, and resistance. The resistance that formed in reaction to the election of Donald Trump styles itself a force to defend constitutional rights, democratic norms, and the rule of law in the United States. Perhaps the New Republic best explained its advent: the Resistance had been born of partisan—that is, Democratic—fury after “liberalism had been dealt its most stunning and consequential defeat in American history.” “For the first time in decades, liberalism has been infused with a sense of energy and purpose,” with millions of people devoted to a singular cause: resisting Trump.

Cass R. Sunstein, On Preferring A to B, While Also Preferring B to A, 30 Rationality & Soc'y 305 (2018).

Categories:

Disciplinary Perspectives & Law

Sub-Categories:

Law & Behavioral Sciences

,

Law & Economics

Links:

Type: Article

Abstract

In important contexts, people prefer option A to option B when they evaluate the two separately, but prefer option B to option A when they evaluate the two jointly. In consumer behavior, politics, and law, such preference reversals are often a product of the pervasive problem of "evaluability." Some important characteristics of options are difficult or impossible to assess in separate evaluation, and hence choosers disregard or downplay them; those characteristics are much easier to assess in joint evaluation, where they might be decisive. But the empirical findings do not resolve central questions: Is either mode of evaluation reliable? Which mode of evaluation is better? Some people insist that joint evaluation is more reliable than separate evaluation, because it offers more information. But that conclusion is far too simple. In joint evaluation, certain characteristics of options may receive excessive weight, because they do not much affect people's actual experience or because the particular contrast between joint options distorts people’s judgments. In joint as well as separate evaluation, people are subject to manipulation, though for different reasons. It follows that neither mode of evaluation is reliable. The appropriate approach will vary depending on the goal of the task – increasing consumer welfare, preventing discrimination, achieving optimal deterrence, or something else. Under appropriate circumstances, global evaluation would be much better, but it is often not feasible. These conclusions bear on preference reversals in law and policy, where joint evaluation is often better, but where separate evaluation might ensure that certain characteristics or features of situations do not receive excessive weight.

As progress in the biosciences soldiers forth, new breakthroughs can often be swept up in a common narrative, that is, the narrative of science as a disruptive threat. Responding to perceived threats, policymakers the world over have frequently overreacted to these developments by enacting shortsighted legislation. These knee-jerk reactions often entail a ban or pause on the science to be explored, thereby foregoing a dialog or term-limited oversight. In this paper, we explore the history and transparency of such moratoria.

Across Europe and the Americas, the Enlightenment brought intellectual and institutional tumult over that most basic attribute of the political economy – its medium. By the time the age was over, money operated according to a new design. It enabled a set of financial practices that were unprecedented: modern money worked synergistically with circulating public debt, capital markets, and commercial banking. Together, that quartet of innovations transformed the political economies of the West. The essay considers the themes of that change, including the depth of conceptual innovation on money and finance, the range of institutional experimentation, and the contentious nature of the debate. The essay takes a short tour of the Enlightenment quartet to suggest how interdependent was (and is) the development of those institutions.

To legal scholars who have devoted much of their professional lives to the comparative study of legal systems, the benefits of comparative law can seem abundant, obvious, and more relevant than ever in today’s increasingly globalized world. Yet, paradoxically, it is not at all clear what role cross-national legal studies will play in twenty-first century legal academies. Unprecedented global interdependence has spurred many changes in the standard law school curriculum, with course offerings proliferating in the areas of international business, international tax, international arbitration, public international law, and international human rights. These very changes, however, have fostered a mentality that is somewhat impatient with national, regional and local differences. To ardent proponents of standardized and universal norms, the comparative enterprise can seem unnecessary or obstructive. At the same time, persons concerned about globalization’s disruptive effects on local cultures are apt to view foreign law studies with the same skepticism they hold toward internationalism in general.

In this chapter, we analyze three instances that illustrate the political economy of corporate governance. First, we examine how the politics of organizing financial institutions affects, and often determines, the flow of capital into the large firm, thereby affecting, and often determining, the power and authority of shareholder-owners. Second, we show how continental European nations have been slow in developing diffusely owned public firms in the years after World War II. The third political economy example deals with management in diffusely owned firms. The chapter also looks at the historical organization of capital ownership in the United States, noting how the country’s fragmented financial system limited the institutional blockholders and increased managerial autonomy over the years. Finally, it discusses the power of labor in postwar Europe, political explanations for the continuing power of the American executive and the board in recent decades, other political economy channels for corporate governance, and the limits of a political economy analysis.

In this chapter I examine whether short-termism in stock markets justifies using corporate law to further shield managers and boards from shareholder influence, to allow boards and managers to pursue their view of sensible long-term strategies in their investment and management policies even more freely. First, the evidence that on stock market short-termism is mixed and inconclusive, with managerial mechanisms under-rated sources of short-term distortions, including managerial compensation packages whose duration often is shorter than that of institutional stockholding; further insulating boards from markets would exacerbate these managerial short-term-favoring mechanisms. Nor are courts well positioned to make this kind of basic economic policy, which if serious is better addressed with policy tools unavailable to courts.

This chapter examines how mergers, acquisitions, and restructuring are regulated, both within the formal body of corporate law and as that law interacts with other bodies of law such as securities (including listing standards), antitrust, industry-specific regulation, and regulations of cross-border transactions. It begins with an overview of relevant terminology and scope of M&A and restructuring and how they differ from other corporate transactions or activities. It then considers major types of M&A transactions, the core goals of corporate law or governance, and other bodies of law (antitrust, industry-based regulation, regulation of foreign ownership of business, and tax) that give special treatment to M&A and restructuring, and sometimes interact with corporate law and governance. It also looks at laws that constrain M&A transactions and those that facilitate them. It concludes by summarizing empirical research and discussing what variations in types and modes of regulation governing M&A and restructuring transactions imply.

This chapter examines the impact of private and public enforcement of securities regulation on the development of capital markets. After a review of the literature, it considers empirical findings related to private and public enforcement as measured by formal indices and resources, with particular emphasis on the link between enforcement intensity and technical measures of financial market performance. It then analyses the impact of cross-border flows of capital, valuation effects, and cross-listing decisions by corporate issuers before turning to a discussion of whether countries that dedicate more resources to regulatory reform behave differently in some areas of market activities. It also explores the enforcement of banking regulation and its relationship to financial stability and concludes by focusing on direct and indirect, resource-based evidence on the efficacy of the US Securities and Exchange Commission’s enforcement actions.

This chapter reviews the benefits and costs of using indices, in particular the G- and E-indices, in empirical corporate governance research. As with corporate governance itself, the widespread use of corporate governance indices have both costs and benefits. The literature has identified a number of concerns with the use of these indices including concerns over measurement error, endogeneity, reverse causation, omitted variables and proper identification of the actual mechanisms by which corporate governance might matter. On the other hand, these indices enjoy several important benefits that explain their continued and widespread use. It concludes that event study methodology and the utilization of legal shocks/regulatory discontinuities for identification will likely play an ever greater role in future research.

Philip B. Heymann & Stephen P. Heymann, Challenging Organized Crime in the Western Hemisphere: A Game of Moves and Countermoves (Routledge 2018).

Categories:

Criminal Law & Procedure

Sub-Categories:

Organized Crime

Type: Book

Abstract

Challenging Organized Crime in the Western Hemisphere: A Game of Moves and Countermoves takes the unusual approach of exploring and describing how organized crime groups develop their capacities in response to heightened powers of law enforcement; and how law enforcement in turn responds, creating an ongoing dynamic interaction. The book shows how a state, such as the United States, has and can develop new laws and practices in ways that enable them to deal with relatively large violent groups—and yet preserve the rule of law and civil liberties.
While most texts describe organized crime groups and the challenges to government they impose from a static perspective, the authors dissect the interaction over time of organized crime and democratic governance that has created the present structure and balance of advantages in the United States. Readers learn about the markets for contraband and extortionate protection that form the bulk of organized criminal enterprise, the vulnerabilities of the traditional practices and rules of law enforcement, the effects of globalization of criminal enterprises on their contest with the state, the effectiveness of various practices of law enforcement, and the continuing forces of change, often technological, in the businesses of organized crime and law enforcement that play important roles in the contest between them.
This thought-provoking book is ideal for students of organized and transnational crime in university programs and law schools, as well as researchers and legal practitioners, who seek to look beyond the simple traditional history of organized crime and develop a strategy to confront organized crime in the future.

Jeannie Suk Gersen, Some Advice for Brett Kavanaugh, President Trump’s Second Nominee to the Supreme Court, NewYorker.com (July 9, 2018).

The Fourth Amendment is generally seen as a procedural provision blind to a defendant’s conduct in a given case, distinguished on that very ground from the Supreme Court’s frequently moralistic assessment of conduct in its due process privacy caselaw. Yet ever since the Court recentered Fourth Amendment protections around an individual’s reasonable expectations of privacy, it has consistently tied those protections to the nature and, specifically, the social value of the activities involved. As in its substantive due process cases, the Court frequently allots Fourth Amendment privacy interests based on its moral evaluation of private acts, privileging conventional social goods like domesticity, romantic relations, and meaningful emotional bonds. And in some cases—most notably those involving aerial surveillance, home visitors, and drug testing—the Court has adopted an expressly retrospective analysis, tying Fourth Amendment rights to a defendant’s actual conduct at the time of a search.
This unrecognized strain of moralism in the Fourth Amendment is a troubling development, unmoored from the Amendment’s text, hostile to its well-documented history, and obstructive of its practical operation in regulating police abuses. Not least, that moralistic approach upends prevailing understandings of privacy, as a refuge from the pressures and expectations of society. Especially in the electronic age, as digital technologies vastly expand the police’s ability to parse categories of private data, the Court must cabin its moralistic turn, restoring a richer view of Fourth Amendment values as encompassing individualistic and unorthodox pursuits. This Article identifies two immediate steps for moving forward: renouncing the Court’s privileging of “intimate” over impersonal conduct and reconsidering the controversial binary-search doctrine gleaned from the Court’s drug-testing cases. More fundamentally, it joins an ongoing debate about the adequacy of the Court’s privacy-based Fourth Amendment framework, suggesting both the importance and the difficulty of restoring a Fourth Amendment attuned to liberal values of individualism and moral autonomy.
Finally, this Article addresses what the surprising rise of Fourth Amendment moralism suggests about constitutional privacy rights more broadly. Belying the value of privacy as a sanctuary from social judgment, the Court’s persistently moralistic jurisprudence challenges the extent to which our Constitution has ever protected, and perhaps can ever protect, a robust right of “privacy” as such.

Merger and acquisition deals are governed by merger clauses which are negotiated between the bidder and target in order to communicate deal terms, specify risk sharing between the parties, and describe dispute management provisions in case of litigation. In a large sample of manually collected U.S. deal contracts involving publicly traded bidders and targets, we construct merger clauses indices based on legal scholars’ ex-ante prediction and examine the relationship between announcement returns and different types of merger clauses. We find that bidder protective clauses correlate with higher bidder returns while target protective clauses and pro-competition clauses correlate with higher target returns. We also find that bidder and target protective indices have larger impacts on announcement abnormal returns for “bad” deals than for “good” deals. Finally, we find that the inclusion of more bidder protective clauses leads to lower deal completion rates while the inclusion of more target protective clauses and pro-competition clauses has no impact on deal completion rates. These results are consistent with the expert lawyer/efficient contracting view of Cain, Macias, and Davidoff Solomon (2014), and Coates (2016), and against merger contracts as boilerplate agreements.

Using fourteen government censuses and a wide variety of quantitative historical sources, I trace the origins of the Japanese putative outcastes. Sympathetic scholars have long described the group - called the burakumin - as the descendants of a 17th century leather-workers' guild. Members of the group suffer discrimination because their ancestors handled dead animals, they write, and ran afoul of a distinctively Japanese religious obsession with ritual purity.
In fact, the burakumin are not descended from leather-workers. They are descended from poor farmers. Eighteenth-century Japanese would not have discriminated against them out of any concern for ritual purity. They would have discriminated against them because they were poor. The burakumin identity as we know it dates instead from the early 20th century. In 1922, self-described Bolsheviks from the buraku upper class lauched a "liberation" movement. To fit their group within Marxist historiography, they created for it a fictive identity as a leather-workers' guild. Within a few years, however, criminal entrepreneurs from the urban slums had hijacked the new movement. They embarked on full-scale identity politics, and generated the public hostility that has plagued the group ever since.
The criminal leadership used discrimination claims to shake down local (and eventually the national) governments for ever-increasing transfer payments. Before the 1920s, prosperous member of the buraku had stayed and helped to build its social and economic infrastructure. After the 1920s, those burakumin who hoped to capitalize on the shakedown strategies continued to stay. Given the public hostility that the criminal leadership generated, however, those who preferred mainstream careers increasingly left and merged into the general public.

How do human beings make decisions when, as the evidence indicates, the assumptions of the Bayesian rationality approach in economics do not hold? Do human beings optimize, or can they? Several decades of research have shown that people possess a toolkit of heuristics to make decisions under certainty, risk, subjective uncertainty, and true uncertainty (or Knightian uncertainty). We outline recent advances in knowledge about the use of heuristics and departures from Bayesian rationality, with particular emphasis on growing formalization of those departures, which add necessary precision. We also explore the relationship between bounded rationality and libertarian paternalism, or nudges, and show that some recent objections, founded on psychological work on the usefulness of certain heuristics, are based on serious misunderstandings.

Annette Gordon-Reed, Opinion, At Long Last, Sally Hemings in the Spotlight, N.Y. Times, June 16, 2018, at A23.

Patient-centered outcomes research (PCOR) is becoming increasingly common. However, there is little evidence regarding what novel ethical challenges, if any, are posed by PCOR with relevance to institutional review board (IRB) oversight and human subjects protections. This article reports the results of a national survey of all IRB chairpersons from research-intensive institutions in the United States. Findings address the responsibilities of IRBs and the challenges associated with PCOR review and oversight. IRB chairpersons varied in their judgment of PCOR’s overall value to the scientific enterprise and to research at their institution. Furthermore, 27% of respondents considered patients serving in nontraditional roles to be research subjects even when they are not enrolled in research. There was also variation in the training and safeguards their IRBs require for patient partners. Our results suggest that guidance should be developed around ethical and regulatory issues associated with PCOR oversight.

Halperin presents another look at choice of entity under the Tax Cuts and Jobs Act. He offers a conceptual approach to fully appreciate the actual rate of tax on corporate and passthrough income, following up on three earlier Tax Notes articles over the past eight years that had a similar goal.

Cass R. Sunstein, Originalism, 93 Notre Dame L. Rev. 1671 (2018).

Categories:

Government & Politics

,

Constitutional Law

Sub-Categories:

Constitutional History

,

Judges & Jurisprudence

,

Executive Office

,

Politics & Political Theory

,

Congress & Legislation

,

Supreme Court of the United States

Links:

Type: Article

Abstract

Originalism might be defended on two very different grounds. The first is that it is in some sense mandatory – for example, that it follows from the very idea of interpretation, from having a written Constitution, or from the only legitimate justifications for judicial review. The second is that originalism is best on broadly consequentialist grounds. While the first kind of defense is not convincing, the second cannot be ruled off-limits. In an imaginable world, it is right; in our world, it is usually not. But in the context of impeachment, originalism is indeed best, because there are no helpful precedents or traditions with which to work, and because the original meaning is (at least) pretty good on the merits. These points are brought to bear on recent defenses of originalism; on conflicts between precedents and the original meaning; on conflicts between traditions and original meaning; and on nonoriginalist approaches, used shortly after ratification.

Cass R. Sunstein, The Welfare Effects of Information (June 10, 2018).

Categories:

Government & Politics

,

Disciplinary Perspectives & Law

Sub-Categories:

Law & Behavioral Sciences

,

Law & Economics

,

Administrative Law & Agencies

Links:

Type: Other

Abstract

Some information is beneficial; it makes people’s lives go better. Some information is harmful; it makes people’s lives go worse. Some information has no welfare effects at all; people neither gain nor lose from it. Under prevailing executive orders, agencies must investigate the welfare effects of information by reference to cost-benefit analysis. Federal agencies have (1) claimed that quantification of benefits is essentially impossible; (2) engaged in “break-even analysis”; (3) projected various endpoints, such as health benefits or purely economic savings; and (4) relied on private willingness-to-pay for the relevant information. All of these approaches run into serious objections. With respect to (4), people may lack the information that would permit them to say how much they would pay for (more) information; they may not know the welfare effects of information; and their tastes and values may shift over time, in part as a result of information. These points suggest the need to take the willingness-to-pay criterion with many grains of salt, and to learn more about the actual effects of information, and of the behavioral changes produced by information, on people’s experienced well-being.

The nature of the presidency cannot be understood without reference to norms. The written provisions of our constitutional structure do not, by themselves, offer a sufficiently thick network of understandings to create a workable government. Rather, those understandings are supplied by norm-governed practices. Presidential power is both augmented and constrained by these unwritten rules. The article offers a sustained account of the norm-based presidency. It maps out the types of norms that structure the presidency, and excavates the constitutional functions that these norms serve, the substantive commitments that they supply, the decisional arenas where they apply, and the conditions that make some norms (relative to others) more or less fragile. Understanding these characteristics of an unwritten Article II helps to mark abnormal presidential behavior when it arises. It also brings into view core features of structural constitutionalism itself. Norms simultaneously settle constitutional duty for a time and orient contestation over what legitimate practice should be. Norms, however, cannot be understood in contrast to a fixed constitutional structure. Rather, norms bring into view the provisional nature of our constitutional order itself.
The role of presidential norms in constituting a working government raises a pressing question for public law theory: What happens when these norms break down—when the extralegal system ceases to enforce them? The article sketches a spectrum of judicial responses, each of which finds occasional (though often implicit) support in the case law. Prescriptively, it argues that when the norms of the presidency collapse, the norms of the judiciary appropriately adjust. Underlying judicial deference is an antecedent question of institutional choice: should the court or the president decide the question at issue? The court’s answer to that question is predicated on (sometimes unarticulated) institutional assumptions about how the presidency actually functions—that the presidency is governed by norms that restrain self-dealing or promote considered judgment. Absent such norms, the court is confronted with a very different institutional choice; a court that ignores these presidential norms decides the legal question on false premises.
Courts, however, are and should remain limited players in a norm-based constitutional order. Norms often do not implicate an independent and judicially enforceable legal claim. And the more society depends on courts to check norm breaching by political actors, the more fragile norms of the judiciary may become. Ultimately, it is extra-judicial institutions that sustain or erode the norm-based features of the presidency, and of American constitutional democracy.

There has been a great deal of discussion of the welfare effects of digital goods, including social media. The discussion bears on both private practice and potential regulation. A national survey, designed to monetize the benefits of a variety of social media platforms (including Facebook, Twitter, Youtube, and Instagram), found a massive disparity between willingness to pay and willingness to accept. The sheer magnitude of this disparity – a “superendowment effect” – suggests that in the context of the willingness to pay question, people are giving protest answers, signaling their intense opposition to being asked to pay for something that they had formerly enjoyed for free. Their answers are expressive, rather than reflective of actual welfare effects. There is also a question whether the willingness to accept measure tells us much about the actual effects of social media on people’s lives and experiences. It may greatly overstate those effects. In this context, there may well be a sharp disparity between conventional economic measures and actual effects on experienced well-being.

A firm sells a dangerous product to a population of heterogeneous consumers. Higher consumer types enjoy higher gross benefits from product use but suffer accidents more often. The firm invests resources to reduce the frequency of accidents. When the consumer's net benefit function (gross benefits minus expected harms) is decreasing in consumer type, the firm contractually accepts liability for accident losses and invests efficiently in product safety. When the consumer's net benefit function is increasing in consumer type, the firm contractually disclaims liability for accident losses and under-invests in product safety. Legal interventions, including products liability and limits on contractual waivers and disclaimers, are necessary to raise the level of product safety.

This essay seeks to explain why the United States is struggling to deal with the “soft” cyberoperations that have been so prevalent in recent years: cyberespionage and cybertheft, often followed by strategic publication; information operations and propaganda; and relatively low-level cyber disruptions such as denial-of-service and ransomware attacks. The main explanation for the struggle is that constituent elements of U.S. society—a commitment to free speech, privacy, and the rule of law, innovative technology firms, relatively unregulated markets, and deep digital sophistication—create asymmetric weaknesses that foreign adversaries, especially authoritarian ones, can exploit. We do not claim that the disadvantages of digitalization for the United States outweigh the advantages, but we present reasons for pessimism.

Adrian Vermeule, The Publius Paradox: On the Dangers of a Weak Executive, 2018 Chorley Lecture, London School of Economics (June 5, 2018, forthcoming Modern L. Rev.).

Categories:

Constitutional Law

,

Government & Politics

Sub-Categories:

Executive Office

,

Separation of Powers

,

Federalism

Links:

Type: Article

Abstract

At the Philadelphia convention assembled to draft a new Constitution, Alexander Hamilton argued “[e]stablish a weak government and you must at times overleap the bounds. Rome was obliged to create dictators.” Publius then expands upon this argument in several ways in the Federalist. I suggest that Publius identifies a dynamic or mechanism, the “Publius Paradox,” that warrants great attention: Under particular conditions, excessive weakness of government may become excessive strength. If the bonds of constitutionalism are drawn too tightly, they will be thrown off altogether when circumstances warrant. After illustrating and then analysing this “Publius Paradox,” I will turn briefly to its implications, the main one being that constitutional law should be cast as a loosely-fitting garment — particularly the executive component of the constitution and the scope of executive powers.
2018 Chorley Lecture, London School of Economics. Lecture video: https://onedrive.live.com/?authkey=%21AFgS0YbuvpwXhN4&cid=AF47A00F85EB8C77&id=AF47A00F85EB8C77%215252&parId=AF47A00F85EB8C77%213702&o=OneUp

We propose a fundamental restructuring of the federal civil pretrial process to address its great expense and unreliability in resolving cases on their merits – problems largely attributable to discovery. The proposed reforms establish an affirmative disclosure mandate that sharply reduces the role of discovery by shifting most of the parties’ burden of fully revealing discoverable matter, favorable and unfavorable, to their pleadings. To effectuate the new function for pleadings, the reformed process eliminates Rule 12(b)(6), (c) and (f), with pretrial merits review conducted exclusively pursuant to the procedures and standards for summary judgment under Rule 56. Responding parties will be required to fully disclose discoverable matter as to which they have exclusive or superior practical access (“asymmetric information”),but only if the initiating party’s pleading makes a summary-judgment-proof showing on all elements of their claims or defenses that are unaffected by the information asymmetry. Discovery, if any, would generally be deferred to the post-pleading stage and restricted to court-approved targeted use as may be needed for purposes of facilitating resolution of cases by summary judgment, settlement, or trial preparation. Compared to the current regime, the reformed pretrial process should enable courts and parties to resolve more cases on the merits, more cheaply, quickly, and reliably, thus increasing deterrence and other social benefits from the use of civil liability to enforce the law. We note that tests of these projected benefits are underway in two district court pilot projects recently launched by the Federal Judicial Conference to evaluate “Mandatory Initial Discovery” rules that employ an affirmative disclosure mandate similar to, but was developed independently of, our proposal.

In the past decade, policymakers have increasingly used behaviourally informed policies, including “nudges,” to produce desirable social outcomes. But do people actually endorse those policies? This study reports on nationally representative surveys in five countries (Belgium, Denmark, Germany, South Korea, and the US) carried out in 2018. We investigate whether people in these countries approve of a list of 15 nudges regarding health, the environment, and safety issues. A particular focus is whether trust in public institutions is a potential mediator of approval. The study confirms this correlation. We also find strong majority support of all nudges in the five countries. Our findings in general, and about trust in particular, suggest the importance not only of ensuring that behaviourally informed policies are effective, but also of developing them transparently and openly, and with an opportunity for members of the public to engage and to express their concerns.

Cass R. Sunstein, Freedom: The Holberg Lecture, 2018 (June 2, 2018).

Categories:

Disciplinary Perspectives & Law

Sub-Categories:

Law & Behavioral Sciences

,

Law & Economics

Links:

Type: Other

Abstract

If people have freedom of choice, do their lives go better? Under what conditions? By what criteria? Consider three distinct problems. (1) In countless situations, human beings face a serious problem of “navigability”; they do not know how to get to their preferred destination, whether the issue involves health, education, employment, or well-being in general. This problem is especially challenging for people who live under conditions of severe deprivation, but it can be significant for all of us. (2) Many of us face problems of self-control, and our decisions today endanger our own future. What we want, right now, hurts us, next year. (3) In some cases, we would actually be happy or well-off with two or more different outcomes, whether the issue involves our jobs, our diets, our city, or even our friends and partners, and the real question, on which good answers are increasingly available, is what most promotes our welfare. The evaluative problem, in such cases, is especially challenging if a decision would alter people’s identity, values, or character. Private and public institutions -- including small companies, large companies, governments – can help people to have better lives, given (1), (2), and (3). This Essay, the text of the Holberg Lecture 2018, is the basis for a different, thicker, and more elaborate treatment in a book, On Freedom (forthcoming, Princeton University Press, 2019).

Legal directives – whether laws, regulations, or contractual provisions – can be written along a spectrum of specificity, about which behavioral and legal scholarship present conflicting views. We hypothesized that the combination of specificity and monitoring promotes compliance but harms performance and trust, whereas the combination of specificity and good faith enhances both the informative goal-setting aspects of specificity and people's sense of commitment. To test these hypotheses, we used a 2x2x2 experimental design in which participants were instructed to edit a document with either general or detailed instructions, with a reference to good faith or without it, and with a review of the work or without it. Participants could engage in various levels and kinds of editing, allowing us to distinctly measure both compliance and performance. When participants require information and guidance, as in the case of editing, we found that specificity increases performance relative to the vague standard condition. We discuss the characteristics of the regulatory frameworks in which our findings are especially relevant.

Preemptive rights are thought to protect minority shareholders from cheap-stock tunneling by a controlling shareholder. We show that preemptive rights, while making cheap-stock tunneling more difficult, cannot prevent it when asymmetric information about the value of the offered shares makes it impossible for the minority to know whether these shares are cheap or overpriced. Our analysis can help explain why sophisticated investors in unlisted firms and regulators of listed firms do not rely entirely on preemptive rights to address cheap-stock tunneling, supplementing them with other restrictions on equity issues.

This paper explores the impact of fear on the incomplete take-up of safety net programs in the United States. We exploit changes in deportation fear due to the roll-out and intensity of Secure Communities (SC), an immigration enforcement program that empowers the federal government to check the immigration status of anyone arrested by local police, leading to the forcible removal of approximately 380,000 immigrants. We estimate the spillover effect of SC on the take-up of federal means-tested programs by Hispanic citizens. Though not at personal risk of
deportation, Hispanic citizens may fear their participation could expose non-citizens in their network to immigration authorities. We find significant declines in SNAP and ACA enrollment, particularly among mixed-citizenship status households and in areas where deportation fear is highest. The response is muted for Hispanic households residing in sanctuary cities. Our results are most consistent with network effects that perpetuate fear rather than lack of benefit information or stigma.